Elder Law Attorney Lafayette, LA
Nursing home poverty is real. Our mission at Theus Law Offices, a Medicaid lawyer Lafayette, LA families trust, is to help our client protect everything they own and everyone they love. Nursing home asset protection starts with knowing the rules and how to make them work to your advantage. An experienced Medicaid attorney in Lafayette, LA at Theus Law Offices stands ready to assist you minimize or avoid the crushing costs of long-term care. Protecting assets and enhancing care options can be accomplished with advanced planning and guidance from a seasoned elder law attorney Lafayette, LA residents trust from Theus Law Offices.
Asset Protection Trusts
Medicaid asset protection trusts (“MAPT”) are specially designed to both shield the value of assets transferred to trust from being considered “countable resources” for purposes of Medicaid qualification, and to avoid hidden tax consequences of direct gifts. Properly structured, a MAPT will both protect assets from the high cost of long-term care, as well as avoid unnecessary capital gains tax that may result from direct gifts to children. Making direct gifts to children is a tax trap for the unwary and usually results in avoidable tax being paid upon the sale of assets following the death of the donor. Theus Law Offices is a Medicaid law firm Lafayette, LA area residents turn to for seasoned advice about nursing home asset protection planning through irrevocable Medicaid asset protection trusts (sometimes referred to as “income only” trusts). For more information or a free consultation contact a Medicaid attorney in Lafayette, LA at Theus Law Offices.
Five-Year Lookback Period
The five (5) year lookback period is a trap for the unwary that can result in catastrophic financial consequences due to the mere mistiming of the filing of an application for Medicaid. Warning should be given to any transfers for less than fair market value (i.e., gifts) made by a Medicaid applicant within five (5) years of the date of a Medicaid application. Such transfers can be subject to a look-back period resulting in a significant penalty.
The penalty is computed as follows: (1) Combine all transfers for less than fair market value during the sixty (60) months preceding the date of the Medicaid application (referred to as the “snapshot date”) and divide that number by Louisiana’s Regional Divisor (currently $5,000 as of the calendar year 2020). For example, if a Medicaid applicant gave away a $200,000 house during the 5-year lookback period, the penalty would be 40 months of ineligibility for Medicaid benefits ($200,000 / $5,000 = 40). While the applicant in the example may be qualified for Medicaid and actually receive a Medicaid card, the applicant will receive no benefits for 40 months, which is a terrible result because the Medicaid applicant needs long-term care, has no countable resources to fund such care and Medicaid is not paying a dime for 40 months.
Nursing homes often assist residents with the preparation and filing of Medicaid applications. No matter how well intentioned, it is recommended to seek advice and consultation from a qualified Medicaid lawyer near Lafayette LA from Theus Law Office prior to filing any Medicaid application because mistiming the application can have significant adverse financial consequences at an especially difficult time.
Theus Law Offices is an Medicaid law firm Lafayette, LA resident turn to for seasoned Medicaid planning advice. If you feel that long-term care may be necessary for you or a love one, contact Theus Law Offices, a LA Medicaid law firm Lafayette, LA trust for proper Medicaid planning.
Personal Caregiver Agreements
A properly structure caregiver agreement can be an effective way to transfer assets to a friend or family member without incurring a penalty. The general notion is to allow payments to a family member or friend for providing care to an elderly loved one prior to filing a Medicaid application. Such payments would be considered a valid spenddown of assets and will not be considered a gift or donation if the Caregiver Agreement complies with Louisiana Medicaid rules and regulations. Payments under a Caregiver Agreement will be characterized as taxable income to the recipient, which is necessary to avoid treatment as a gift or donation that would otherwise trigger an eligibility penalty.
Caregiver agreements are carefully scrutinized by the Medicaid Division of the Louisiana Department of Health and Hospitals upon the filing of any Medicaid application, so the form of the agreement is paramount. As any experienced LA Medicaid lawyer in Lafayette, LA should discuss with you, to be valid in the State of Louisiana, a Caregiver Agreement must include the following attributes:
- The compensation to be paid to the caregiver must be fair market value (consistent with the prevailing market rates) based upon the life expectancy tables and clearly set forth in the agreement
- The number of hours to be worked and the specific duties to be performed must be set forth in agreement
- The caregiver must maintain a daily log of hours actually worked with sufficient detail regarding the services performed
Transfers Between Spouses
Gifts or transfers between spouses will not trigger a penalty under current Louisiana Medicaid rules and regulations. As such, a strategy sometimes employed to qualify an in-need spouse for Medicaid benefits may include a transfer from the in-need spouse to a healthy (community) spouse. It should be kept in mind that the resources or assets of both spouses are countable for Medicaid eligibility purposes in Louisiana. The Community Spouse Resource Allowance (“CSRA”) in Louisiana is $128,640 (as of 2020), which allows a healthy spouse to own up to the CSRA without disqualifying the in-need spouse for Medicaid benefits. Spousal transfers should be structured with the current CSRA in mind.
Most states, including Louisiana, do not allow a healthy spouse to refuse to provide financial support to an in-need spouse. As such, it is not possible in Louisiana to simply transfer all assets of an in-need spouse to the community (healthy) spouse followed by a refusal to provide financial support. Divorce may be a viable nuclear option in extreme scenarios.
A Medicaid lawyer in Lafayette, LA from Theus Law Offices can provide seasoned guidance when optimizing donations between spouses to qualify for Medicaid.
Contact a Medicaid Planning Attorney at Theus Law Offices Today
If you want more information or assistance regarding Medicaid and elder/nursing home care, or other Medicaid planning related matters, please contact a Medicaid lawyer in Lafayette, LA from Theus Law Offices today for answers you need.